SEOUL, June 7 (Korea Bizwire) – South Korean retail giant Lotte will not be abandoning its businesses in China, which have been reeling from apparent retaliation after the company provided the South Korean government with land for a new THAAD anti-missile system.
A Lotte official in China said Wednesday that “there is no change in our position to continue our Chinese operations.”
Earlier this month, E-Mart, South Korea’s largest discount store franchise, announced that it would be withdrawing from China amid widening losses and aggravating business conditions from the months-long Korea-China diplomatic standoff.
The announcement has led to speculation that Lotte will also close down some of its businesses in China, and relocate to more attractive Asian markets like Vietnam.
“(The speculation) is not true,” the Lotte official said. “Through numerous investments in China, Lotte has contributed to the country’s development and helped create new jobs. We will keep up with the accomplishments into the future.”
Lotte’s businesses in China have seen little sign of improvement, even after the election of President Moon Jae-in, who has taken a more cautious approach towards the deployment of the THAAD system, recently ordering a thorough assessment of its environmental impact.
Lotte has revealed that 74 of the 99 Lotte Mart outlets in China still remain shut, after failing “fire inspections” conducted by authorities, with 13 stores voluntarily shuttered following boycotts amid growing anti-Korean sentiment. Lotte’s 3-trillion-won ($2.67 billion) Shenyang project, an entertainment complex with a department store and movie theater, also remains suspended since December of last year.
Lotte has made several gestures to ease its relations with the Chinese government, but to no apparent success. The company’s chairman, Shin Dong-bin, said in an interview with the Wall Street Journal in March that there has been a “misunderstanding” with China over Lotte’s decision to provide a golf course as the site for the THAAD system’s deployment.
“If the government asks a private corporation like ours to give up land, then I don’t think we have the luxury of rejecting the request,” Shin was quoted as saying. “We definitely want to continue our business in China.”
Last month, Lotte estimated that its total losses from the THAAD row reached 250 billion won ($222.5 million) in March alone, forecasting aggregate losses (from March) to surpass 1 trillion won by the end of June.
By Joseph Shin (email@example.com)